It was July, 2005, the headline of the Baltimore Sun read "AREA HOME PRICES HIT RECORD". And, there I was in the photo heading down the front stairs of a beautiful home in Roland Park in Baltimore which I had just shown to my clients.
The article quoted 3 agents. I was one of them. The whole point of the article was so that the media could ask the question: When is the Real Estate Bubble going to Burst? One of the other agents was quoted in the story as saying, "Its a phenomenal increase and there really seems to be no end in sight". Well, I guess he was wrong. For my part of the article, I said that there seemed to be something happening with buyers that Summer of 2005 and that they were no longer willing to jump on any available listing but were being a lot more hesitant in their buying decisions. I could tell something was changing.
Ok, 5 years later - What's going on now? What's the BIG question everyone is or should be asking now? Its this: HAVE WE HIT BOTTOM? Well, Real Estate markets can only be discussed on a local level, right? Here's my take on the current state of the Real Estate Market in the Baltimore area: We have not hit bottom and until we get the close to 16% of consumers back to work, we will continue to see the erosion of our home values. Are we waiting for another shoe to drop? Probably. There are still thousands of foreclosures waiting to hit the market and, again until we see the end of these, don't expect our local market to stabilize substantially. That's it.
What does this mean to you? If you own a home and want to move - You probably don't want to wait until your home increases in value. Why? First, because you may be waiting until the late 20teens before your home appreciates. "Well," you ask, "Won't the homes that I might want to purchase also be worth less if I wait? Sure, but it is the equity position that you have in your current home which is eroding and that is the money you need for that next purchase. Remember, your lender gets paid off first at settlement and then you get what's left.
The media is no longer chasing the Big Bubble with a pin. They are, however, searching for any suds left in the glass after the party is over.